BIS Says Dollar Exposure Leaves Japanese Banks at Risk

The video discusses the financial mismatch faced by Japanese banks, which have significant dollar loans but lack corresponding dollar deposits. This mismatch is funded through short-term markets, posing potential vulnerabilities. Despite this, Japanese megabanks are considered strong, with the Bank of Japan as a backstop. The video suggests international stress tests to assess dollar funding risks, highlighting that regional banks face more risks due to economic stagnation and population decline.

What suggestion does the BS make regarding stress tests for banks?

What are the potential risks faced by regional Japanese banks compared to larger banks?